Farm employers begin preparing for health care law

Editor's note: The following article was written by Christine Souza, an assistant editor of the California Farm Bureau Federation's publication, Ag Alert.

With President Obama about to be sworn in for his second term, individuals and employers alike are thinking more seriously about a key facet of his first term: the new federal health care law, how it will be implemented and what is required to comply.

"Our membership is concerned about how this is going to affect our employees. How is this going to affect providing them what they need?" said Glenn County Farm Bureau President Dave Toney. "We also would like to know what this could cost."

California Farm Bureau Federation Director of Labor Affairs Bryan Little said until the federal government finishes issuing regulations and guidance to implement the Affordable Care Act, and until the state of California begins accepting customers for its health insurance benefits exchange, there is no way to predict accurately what the cost will be for any individual agricultural employer.

"Everybody's situation is going to be a little bit different. Trusted professionals like tax advisors and insurance brokers will be able to give farmers a lot of guidance. But in the end, agricultural employers will need to make some hard decisions about whether it will be cost-effective to continue providing insurance for their employees, or to start providing it," said Little, who also serves as chief operating officer for the Farm Employers Labor Service, a CFBF affiliate.

While the law requires certain employers to provide health insurance coverage for employees by Jan. 1, 2014, many questions remain unanswered, Little said, as agricultural employers wait for more clarity from the Internal Revenue Service about determining which employees are considered full-time and which are considered seasonal.

"The key question that people are going to have to answer is whether they are going to have to provide health insurance for employees on Jan. 1, 2014," Little said.

To do this, he said, agricultural employers should first become familiar with the law, which outlines requirements for different-sized employers:

Small employers—with fewer than 50 full-time-equivalent employees—are generally exempt from penalties related to not providing health insurance. A small employer's uninsured employees may be eligible for expanded Medi-Cal coverage or for subsidies to help purchase coverage in the state exchange. Certain small employers that offer coverage to workers may be eligible for tax credits, if they purchase coverage through the Small Business Health Options Program Exchange and pay at least 50 percent of the total premium.

Large employers—those with more than 50 full-time-equivalent employees—will be required to offer coverage or potentially pay a $2,000 fine for each full-time worker if just one employee receives a subsidy to purchase insurance through a state exchange. A firm's first 30 employees will be subtracted from this penalty payment calculation. Large employers who offer health insurance that fails to meet ACA minimum value requirements are treated the same as if they provided no coverage—in other words, the same potential penalty might apply. If a large employer offers qualifying coverage, but seeks employee contributions for the coverage that exceeds 9.5 percent of an employee's wages, the employer could be assessed a penalty of $3,000 per employee for whom the contribution exceeded 9.5 percent of income.

Employers are exempt from penalties for part-time workers—those who work 30 or fewer hours per week.

Employers with seasonal workers—defined as those working fewer than 120 days in a year—will not be considered subject to the large-employer coverage requirement, as long as the only time they exceed 50 full-time-equivalent workers is during those seasonal employment periods.

Employers with variable-hour or seasonal employees who work more than 120 days will need to consult IRS guidelines to determine appropriate coverage requirements for these types of workers.

Greenhouse operator Kathye Rietkerk of Fontana said she has been following the details of the new health care law and what it may mean for her business, which has provided health care insurance to employees since the 1980s.

"I'm not required to buy health insurance because I'm not big enough, and I'm not small enough to get any of the tax benefits, so I'm in the middle," Rietkerk said.

It is difficult to predict what will happen when the law becomes effective next year, she said, as the exchange comes on board and insurance companies restructure their offerings. Rietkerk said she will evaluate the cost structure of health insurance offerings to see how her business may be affected.

The state of California is setting up its health benefit exchange, called Covered California. The exchange is intended to be a new insurance marketplace where individuals and small businesses can compare rates and coverage options to determine if they qualify for health insurance tax credits.

"For small businesses, we're opening a new marketplace at the same time to give them access to health care choices for their employees," said Oscar Hidalgo, spokesman for Covered California. "Anyone can enroll through the exchange, but the only way to obtain a federal tax credit applied towards your premium and your policy is through the exchange."

Open enrollment for individuals and small businesses to purchase plans through the exchange begins in October and will continue through March. Hidalgo said Covered California is developing an education campaign and a call center where individuals and small businesses can call for assistance. At the end of this month, the exchange plans to launch www.covered.ca.com, a website where people can find information on how to prepare.

To help agricultural employers understand the new health care mandates, the Farm Employers Labor Service will offer seminars for Farm Bureau members and FELS subscribers starting Jan. 25 at the Yolo County Farm Bureau office in Woodland. Other seminars are scheduled Feb. 25 in Fresno at the county Farm Bureau office, and April 5 in Salinas at the Monterey County Farm Bureau office. To learn more about the seminars, see http://fels.net/seminar or call 800-753-9073.